service innovation and competitive advantage ibrahim ...€¦ · ibrahim noorani lecturer,...

European Journal of Business and Innovation Research

Vol.2, No.1, PP. 12-38, March 2014

Published by European Centre for Research Training and Development UK (www.ea-journals.org)

12

SERVICE INNOVATION AND COMPETITIVE ADVANTAGE

Ibrahim Noorani

Lecturer, Department of Public Administration

Benazir Bhutto Shaheed University (BBSU), Lyari, Karachi

+923062073408

ABSTRACT: Service Innovation suggests how the concept of service can be improved which

is already in practice. This can be either refined competence in customer relations, channel

of distribution or innovation in technology or it can be combination of all three. Investing in

the development of both physical and non-physical components of products and services

available for sale can lead to enhanced business prospects, ultimately ensuring success. This

paper attempts to indentify core ingredients of service innovation and their impact on Online

B2B industry in attaining competitive advantage with a resource based view. The difference

found in organizational performance in the context of Online Business can be partially

explained by Information Technology, Human Resource Management, Research &

Development and strategic alliances practices and policies. Furthermore, the research also

attempts to establish how proper implementation of Human Resource Management practices,

experienced adoption of Information Technology and IT-enabled services, well connected

and inform Research and development can all together render greater service innovation

opportunities whereas strategic alliance is the mediocre variable which requires lots of

efforts to impact positively on service innovation.

KEYWORDS: Service Innovation, Competitive Advantage, Human Resources, Information

Technology, Research, Development, Strategic Alliances

INTRODUCTION

To be more competitive, companies constantly explore the methods, tools and services which

can help them in getting competitive edge. To attain the competitive advantage companies

prefer to introduce more innovative services. In today’s world Information Technology (IT)

is acting as a corner stone for service improvement and innovation and helping companies in

rendering better services to its customers and attaining competitive advantage. IT and related

IT-Enabled services are helping companies to identify and bring in rapid changes in overall

organizational structure from production to customer support (Agarwal & Sambamurthy

2002) backed with enhancement in competitive strengths (Sambamurthy et al 2003).

Researchers have been working on from early 1990s and presented numerous researches and

theories to evident Information technology as a key element of innovation (Dewett & Joners

2001). Companies adapt IT oriented architecture to improve and enhance their Product /

service offerings – this is common with many innovation activities – that involve adding new

services, expanding existing ones and/or improving the service delivery process. These all

initiatives are very much relevant but the success of an organization depends on how well it

implements its creative ideas into productive service (Berry et al. 2006).

http://www.ea-journals.org/


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In this research paper we have also tried to relate Information technology as a core ingredient

for Service Innovation and Competitive Advantage. To achieve our research objective we

have chosen Online B2B Industry (Online Business to Business Matching companies /

Portals) and tried to identify Key areas which are acting as growth and success criterion for

Online B2B Industry and making it more lucrative business segment for global investors. The

choice of Online B2B industry was influenced by the desire to investigate service firms in a

highly competitive, dynamic and technology-driven environment.

INTRODUCTION TO INNOVATION

Innovation is a process of creative development or new idea implementation which is focused

towards augmenting features and functionalities of a product or services to render more

improved quality services to the target audience (customers) (Fichman, 2001). Innovation is

also term as a successful exploitation of ideas” DTI (2004: p5). This definition includes every

type and form of innovation and does not include the purpose of innovation. Freeman and

Soete (1997) link innovation with the commercialization of ideas to achieve business growth.

This definition created a fine line between invention and innovation as invention needs

further modification and development to become useable for customers. These modifications

are done by companies and organizations to earn profit besides business growth. Therefore,

to bring invention from laboratories and workshops to superstores and markets companies

enhance and modify those products and services.

However, services and service innovation is start working – The Implementation take place -

at general since its inception. Innovation can be in product, service or process innovation;

these three categories are termed as three levels of innovation (lyytinen and rose, 2003).

Above all levels, process innovation departs much economic impact as it bring in changes in

the whole system of manufacturing, distribution, producing products and delivering services

with efficiency to achieve economies of scale (D. smith, 2006). The improvements in existing

products and services are continuous innovations and major changes or total alteration in

product or service is called radical innovation. The changes and improvements in overall

design and configuration are termed as Architectural Innovations (Melissa A. Schilling

2008). To be more innovative, companies keep searching new ideas and purse the

development of technologically advanced processes to produce more efficient products at fast

pace and keeping overall production cost effective. in the early stages of Cell phones, for

example, prices of cell phones were around $1000 in 1980 but with the development of

technology over long-run these prices were reduced down to $200 in 2004 (Melissa A.

Schilling 2008: p51). Not only this but technological improvement also diffuse more than one

technologies to cell phone like cell phones now also provide internet, radio, camera and

several other features that maximize value of cell phones for customers.

In early researches services were count as an integral or connected part of the product

whereas, in recent literatures and reviews itself now being broadly focused and new horizon

of ideas and processes are investigated separately (Magnusson et al, 2003). As services are

intangible element thus we need continuous feedbacks of our customers who are using the

services in any form to define us the dimensions of innovation and new service augmentation

and value addition. In the process of service innovation, customer participation via surveys is



Vol.2, No.1, PP. 12-38, March 2014


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getting more importance in recent studies (Alam and Perry, 2002) because it helps adjust

product features according to the needs of customers.Service innovation practices include the

activities that support administrative processes, operational process, customer management

processes and integration in organizational cross-functioning. In all these processes

technology perform vital role to support product and service development. As mentioned by

Melissa A. Schilling (2008) innovation is the most important source of competitive success if

combined with Technology, like Baxter, a leading medical equipment and supplies

manufacturer, earned 37 percent of its 2002 sales from the innovative products introduced

during past five years(p1). Furthermore technology enables the companies to introduce

innovative at remarkably fast solutions that help companies to perform better in relation to

their competitors because the short cycle times and innovative products enable companies to

achieve the niche in almost every market.

A new and totally different concept is “blue ocean strategy” that argues that competition is

not always right and restricts the innovation and invention as competitors only focus on

moves of each other rather than customer demands and choices or they become reactive

rather than proactive in providing better products and services. W.C Kim and R. Mauborgne

(2004) argued that competing in overcrowded industries is no way to sustain high

performance. The real opportunity is to create blue oceans of uncontested market space.

Exploring new market space and creating demand through value innovation. They think

competition limits the thinking of managers within the boundaries of competition. Blue ocean

strategy is all about the focus on customer’s needs and creating value in service and goods to

create new market. The process of innovation involves new ways of providing service with

improved service delivery (Chen, J.S. & Tsou, and H.T. 2007). For example, providing

babysitter service for free with cinema service because most people want to see picture by

leaving there child at babysitter. This service provides value for customer hence creates new

market space. As many innovation activities involve adding new services, expanding existing

ones and/or improving the service delivery process, the success of an organization hinges on

how well it implements its service innovation (Berry et al. 2006) to create new markets.

These new markets will provide more customers and improve profitability. The very core

idea of this strategy is to boost the capability of generation of those ideas that increase the

value by innovation for the customer.

The ability of firms to motivate and satisfy their employees has strong relationship with

innovation. The problem with J. Barney theory is that in highly competitive environment,

usually all competitors has access to the similar resources. However, according to Barney

(1991) first mover advantage and good market reputation may still contribute to competitive

advantage. Human resource management practices are highly related to improve service

quality and introduce more innovation in overall organization processes. According to S.H.

Tsaur, & Y.C. Lin (2004) employees who experience positive HRM practices on the three

dimensions “recruitment/selection”, “training/development” and “compensation/benefits”

may thus be “paying back” their organization by being more positive, creative and initiator.

We have separately discussed the importance of human resource and information technology

in relation with innovation and competitive advantage.



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All above models discuss the term competition and rivalry that act as a source of innovation

and improved service and goods to give companies advantage over one another. However,

W.C Kim and R. Mauborgne (2004) have put forward the concept of non-competitive based

model with the name of blue ocean strategy. Under the context of this strategy companies

need to focus on ‘innovation’ with an additional term ‘value’. These writers said that

company need to focus on the customer requirement and needs and explore new markets as

well as make these element the base of innovation rather than making competitive moves in

response to competitors. Those competitive moves does not provide the appropriate benefits

to the customer and most of the time of companies spend in researching the move of other

companies rather than thinking about new products and exploring uncontested market space.

The concept of innovation and adding value to the innovation is also underpinned by the term

‘knowledge economy’ which describes the success businesses in terms of knowledgeable

workforce with proper system of sharing and collecting information. W.C Kim and R.

Mauborgne’s stratgical concept is more focused to the needs of customers and satisfaction as

it recommend to the firms that innovation and the value of services or goods are more

important elements to discover the new market space as the needs of customer keep changing

over the time. Implementation of service innovation heavily effect on the improvement of the

service delivery. (Berry et al. 2006)

Service Innovation and Competitive Advantage

Researchers have discussed competitive advantage under different contexts. For example

discussed that porter said firm can achieve competitive advantage on the basis of cost,

product differentiation guided by five force model and support by value chain activities of an

organization that includes managerial activities like HR, procurement, IT development that

support marketing, inbound and outbound logistics. This competitive advantage is related to

external environment and position the company accordingly to achieve it. In context, service

innovation brings new products, and services that fulfill the rapidly changing customer

requirements. To exploit new ideas into innovative products and Services Company needs to

maximum utilization of its physical, human resources along with technological development

to derive profitability and growth. (Robert and Amit, 2003). Customer satisfaction surveys is

an effective tool used to measure service process innovation elements like to measure service

process innovation element like quality, delivery time, assistance and after sales service (Day

1994). Operational efficiency and effectiveness is also a result of process innovation. Brand

image improvement, sales growth, market ranking improvement are the outcomes of process

innovation as it enable firms to launch technically enhanced and innovative products with

low cost and more value to meet customer needs of reliability, quality and less expensive.

Jay Barney stressed on internal dimension which include firms resource and their role in

competitive advantage and its sustainability. Jay Barney (1991) suggests that resources of

firms are key players in providing sustainable competitive advantage. According to Barney

(1991) valuable, rare, imperfectly imitable, and imperfectly substitutable resources could

generate sustainable competitive advantage for the firm with the pre-requisite of

heterogeneity and imperfectly mobile of resources among competing firms. Understanding

resources of sustained competitive advantage for firms has become a major area of research

(Porter, 1985). Basically these firm’s resources are classified into three categories: physical

capital resources, human capital resources and organization capital resources. Barney (1991)



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includes physical technology used in a firm, a firm’s plant and equipment, its geographical

location and its access to raw material in physical capital resources. In human capital

resources he includes training, judgment, experience, intelligence and relationships. Finally in

organizational capital resources he includes firms’ formal reporting structure, formal and

informal planning and controlling and coordinating systems. In physical capital resources,

technology can help to serve customer best. Building on the assumptions of heterogeneity and

immobility, scholars systematically stress the strategic contributions of people’s knowledge

and skills to the performance of firms and sustained competitive advantage (Boxall,

1996).Thus, the RBV of any organization provides an important perspective on the debate

about HRM and organizational success (e.g. Wright et al., 1994, 1998; Barney and Wright,

1998). Berry et al. (2005) has provided resourced based view of customer value and its

relationship with competitive advantage. In their study they discussed what are the resources

suggested best by customers to give competitive edge to a firm. The management,

development and deployment with protection of firms intangible resources like (trust,

reputation, intellectual property and network) and capabilities (like knowledge, culture, skills

of employees and their experiences) are very difficult to imitate and hence provide

sustainable competitive advantage. However, firms tangible resources like their equipment,

technology can be duplicated hence do not provide sustainable competitive edge. Proper

utilization of tangibles can give competitive advantage to the firm. Similarly, Continuous

improvement in technology will provide sustainable competitive advantage. For example the

use of customer relationship management software gives comprehensive information about

customer choice and preference and provides market intelligence. Moreover, ‘CRM is based

on the theory that organizations that use information on customers most intelligently will

serve customers' needs best and, consequently, gain competitive advantage.’ (Wilford, 2000).

Role of Information Technology in Innovation Practices:

Information Technology perform significant role at operational level, as it is the core

ingredient of information and its dissemination and let companies to improve and innovate

performance measurement systems.

Strategic alignment suggests that the effect of information technology on performance will

depend on how well the information technology strategy and corporate strategy coincide

(Chan et al. 1997; Palmer & Markus 2000). The successful adoption of new information

technology requires people in the entire organization to adapt and provide employee support

and training, to reap greater benefits beyond the change in technology.

The technology acceptance model (TAM) of Davis (1993) tries to analyze why users adopt or

reject a system as for innovation to take place it is important that people are willing and able

to accept the change.



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Figure 1. Technology acceptance model (TAM) by Davis (1993).

Davis (1993) stresses that this model is only usable for voluntary use of IT system, and that

further factors should be included in his model, such as extrinsic motivation, user experiences

with the system, and characteristics of the task to be supported by IT (e.g. complexity of a

task).

Role Human Resources in Innovation:

Innovation is an important means of survival in the face of the dynamic nature of competitive

environments (Han, Kim and Srivastava, 1998), a form of organizational adaptation that has

been propelled by several external forces: technological developments, deregulation,

globalization, shortening of innovation cycles and new buyer needs (Cunha and Verhallen,

1998).

The impact of innovation on organizational results has been generally demonstrated in

empirical studies (Utterback, 1994), but relatively little attention has been paid to the extent

to which HRM practices may positively contribute to innovation performance. Therefore, we

have utilized the service quality model of HR as it the efforts toward quality improvement

most of the time fuel up the process of innovation.

Figure: 2 HR based service quality model: Source: S.H. Tsaur, & Y.C. Lin (2004).

In figure 2 S.H. Tsaur & Y.C. Lin (2004) have related HRM practices like, recruitment and

selection, training and development, compensation and benefits and performance appraisal to

tangibles, reliability, responsiveness, assurance and empathy. In service behavior employee’s

promptness is measured. For example how willing he or she is to help customers.



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Research Question:

How can Service innovation practices provide competitive advantage using a case study

approach?

Research Objectives:

In this research my first objective is to highlight elements that are key contributor to the

service innovation that further result in improved services hence the competitive advantage.

Furthermore I would like explore the role of human capital in service innovation. Finally how

important role R & D and training of employee play in process of innovation in services.

METHODOLOGY APPROACH

The strategy for this research is inductive which is guided by the literature review. This

strategy is underpinned by the topic of my research that is service innovation for competitive

advantage. For example service quality is highly dependent of the skills and abilities of

employees and manager. More over customer perception about service quality and their

identification process are most important to improve service quality. Therefore we will

explore the view of managers qualitatively who are in the field so that they can share their

information and ideas about the topic that will enable me to answer my research question.

Key elements and factors could be determined by analyzing the information from this

information to categorize the most and least important variable affecting my research

question. The relationship among those dependent and independent variable will guide me to

develop. I will develop the relationship model which will describe the affects of independent

variable on dependant variable as Saunders, Lewis and Thornhill (2007) said that inductive

strategy include the development of model from the information which is collected from the

interviews and literature review.

METHOD OF DATA COLLECTION

As I have explained my view of seeing the reality that values and beliefs are constructed

socially. Therefore, I will conduct interviews with the appropriate managers of TradeKey to

explore my research area. This process of data collection will be started by contacting to my

friends in my home country to help to gain access to the TradeKey. By this way I can save

my time in gaining access to that particular company as my friend are working in some

multinational organizations. Once my friend gives me his or her consent then I will send e-

mail to the Human resource department of that company with his or her reference. Once I got

permission to conduct the research then I will state to whom I want to conduct interviews via

e-mail and telephone.

I conduct the interview with IT manager and the head of research and development

department. This reason of conducting interview with IT manager is that he can understand

the most current issues of customers and employee related with service innovation. Therefore

he is in better position to point out the most important factors that enable the company to

innovate a service. Furthermore he can state his views about the role of service innovation in

competitive advantage. On the other R & D manager can explain key areas where company is

focusing to bring innovation into its services. He will explore investment and research



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dimension that will underpin importance of that variable which contribute to service

innovation hence the competitive advantage that will enable me to provide qualitative

evidence to my research. Under the support of these interviews a model of recommendation

will be set up (Lindlof & Taylor, 2002). I will use open questions with appropriate probing

questions to get the opinions and know the experiences of interviewees.

Limitations This exploratory study has some limitations. These limitations are related to the data

collection and its interpretations as the data is collected from one organization’s mangers,

therefore generalization of the results is not possible. Information technology (IT) manager

and Research and development Manager represent their views according to their experiences

therefore findings might be very specific and stick to that particular firm. Furthermore, this

study totally focused on the views of managers not of the employees therefore the finding are

limited to the management point of view and does not reflect what an individual can

contribute to the research and innovation to provide competitive advantage..

Online B2B Industry Overview

When B2B e-commerce began in the early 1990s, no one expected the growth explosion it

experienced in the latter part of the decade. Moreover, it has continued to expand at such a

rapid rate that this one-time novelty has now become, according to Jupiter Communications,

a $336 billion industry. This growth can be explained by the converging of new technology

with traditional business needs. Businesses from nations all over the world now use B2B e-

commerce to purchase over a trillion dollars in goods and services every year; something

traditional methods and technologies designed to facilitate procurement could not

accomplish.

Market Dominance of Online B2B Players in Asia Region

Online B2B marketplace worldwide is dominated by players from Asia. Around 90% of the

world's top online B2B marketplaces are from Asia and only 10% are from North America.

Most of the top online B2B marketplaces from Asian countries are primarily horizontal in

nature and cater to multiple or almost all industries. They also have global footfalls and serve

International markets.

Growth Driver for the Online B2B marketplace-International: ICT Penetration

The fast B2B e-adoption rates worldwide are directly proportional to the ICT penetration

among various countries of the world. As the data indicates (e-Marketer, 2008) by 2012

nearly 50% of the world's Internet population will live in the Asia-Pacific region. The share

of the world's Internet users in Europe and North America will fall, though absolute numbers

will continue to rise in both regions, as the share of users in Latin America and the Asia-

Pacific region both grow. So the next phase of growth for B2B E-adoption will come from

Asia Pacific countries and India holds a promising future in this market.



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Internet Users Worldwide, by region, 2007-2012 (Millions and CAGR*)

SR

#

Countries 2007 2008 2009 2010 2011 2012 CAGR

2007-12

1 Latin America

98.4

113.7

129.3

144.7

158.7

171.3

11.70%

2 Europe

325.0

347.5

368.8

387.8

405.1

420.5

5.30%

3 Asia Pacific

476.6

543.8

610.8

679.7

750.1

818.3

11.40%

4 North America

209.9

216.5

223.4

230.2

236.6

242.2

2.90%

5 Rest of World

42.2

46.4

50.6

54.8

58.9

62.8

8.30%

Worldwide

1,152.1

1,267.9

1,382.9

1,497.2

1,609.4

1,715.1

8.30%

Table 2: Internet Users Worldwide. 2007-2012 (million)

Source: eMarketer Internet Users EsDmstes for 25 countries wortdmde. January 2008

Note: eMarketer defines an Internet user as any person who uses the Internet from any

location at least once a month: *compound annual growth rate (CAGR)

3.1.3 B2B E-commerce Market Size - Worldwide

Fortune 500 firms today are the primary drivers of Internet-based commercial activity.

Forrester Research uses an S-curve to project the extent of e-commerce adoption. Typically,

widespread adoption of a new technology is said to begin when more than 10% of companies

in an industry have begun to implement it. Forrester marks this point as the beginning of -

hyper growth,' which concludes at an industry saturation point with 90% of companies

having adopted e-commerce capabilities. Extrapolating this out to a regional and national

level, Forrester Research has predicted that North American hyper growth has already begun

in 2000, to be followed closely by Western Europe in 2001.

Table3:Expected Beginning of Widespread E-commerce Adoption by Region Source:

Computed from Forrester Research Asia Pacific Rim hyper growth has already begun in 2003

and since then India has been witnessing traction in the E-commerce space.

SR # Countries Hyper Growth Year

4 North America 2000

3 Asia Pacific 2003

1 Western Europe 2001

2 Latin America 2004

5 Africa / Middle East 2005

Eastern Europe 2005



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Although the share of developing countries in total world e-commerce is predicted to grow by

around 48% in 2008 (Forrester research, 2008), in absolute terms the share was around 6.7%

in the year 2006 (Forrester Research) The overwhelming share of the developing countries

participation in global online trade is forecasted to be concentrated in Asia Pacific region in

coming years.

The value of online trade in developing countries by 2006 although modest in comparison

with the global figures, amounted to more than 180% of the lowest estimates of the world E-

commerce for the year 2002.Growth by region was fasted in Asia and the Pacific (109%

increase between 2000 and 2005), followed by western Europe (91%), and North America

(68%). The rates of growth may vary a bit, but by and far Asia and Pacific will be the fasted

growing B2B e-commerce market worldwide driving on a continuously shrinking size of

North American Markets.

Top Online Marketplaces Worldwide

Now-a-days, 24 leading online portals are enjoying the major market share of online B2B

Worldwide such as Alibaba.com, TradeKey.com, ECPlaza.net, ec21.com, tradeindia,

indiaMart and more. Almost all the leading online B2B marketplaces offer free Memberships

and on an average the member base of these portals are ranging from 10,000 to 45 Million

users. Around 1% to 10.2% of the registered users on these e-marketplaces are paid

members. The number of paid members, especially, depends on the membership fees. A

realistic growth rate for a stable e-marketplace is in the range of 10% to 25%. (International

B2B Trade Portal, 2007).

B2B Buyers – Market Drivers

B2B Purchase Cycle: Phase versus Role, analysis is based on an earlier analysis done by

Enquiro Search Solutions Inc. in a report titled: "Business to Business Survey 2007". Some of

the key findings of this analysis are given below.

A typical B2B buyer's cycle goes through the following 4 phases:

a) Awareness: This is where you first learn about needs or opportunities. You learn you have a

pain that needs to be solved.

b) Research/Consideration: Information and/or data gathering, defining of requirements,

evaluating, screening of options, creation of a short list of candidate solutions.

c) Negotiation/vendor Finalization: Reviewing vendors' offerings before making

recommendations, negotiating the best price, finalizing specifics of final purchase.

d) Purchase: Approval of purchase, recommendations and authorizing purchases. Completion

of paper work required for procurement. Specifics of final purchase.

TradeKey Business Profile

TradeKey.com was established in 2005 as a private limited company, with an objective to

facilitate global trade and bring buyers and sellers from all around the world to one common

platform. With a capital investment of US $20 Million - TradeKey.com is aiming to become

the world's leading marketplace which connects traders with worldwide.



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TradeKey.com is the world’s fastest growing Trading Platform for International Business and

the strongest E-commerce website which connects over 4 Million Importers and Exporters in

more than 240 countries including USA, UK, China, Germany, France, India, Pakistan and

Middle East; Quickly and Cost Effectively.

TradeKey.com welcomes over 13 Million traders every month from around the world who

view more than 38 Million products, sell offers, company profiles and buying leads, which in

turn generate business of worth over $ 100 Million every month.

TradeKey.com is world’s 1st B2B Marketplace that earned ISO9001 Quality Management

System and ISO27001 Information Security System certifications to ensure maximum

customer satisfaction, security and safe online trading. TradeKey.com has been Ranked

Highest Trustable Website by our customers and Independent 3rd Party Evaluators

TradeKey.com – Quick Facts

More than 4,200,000 Registered Traders

Over 13,200,000 Visits by Global Traders

Traders view over 38,400,000 Products, Services and Buying Ads

Online Shopping Mall of over 9 Million Products

Outlets of over 500 thousand Companies

Highest Google Page Rank i.e. 8/10

Ranked Highest Trustable Website by Evaluators

Innovation Drivers at TradeKey

TradeKey is following technology based innovation strategy to produce innovative business

solutions to global traders with proactively taking actions to assure secure and successful

trade. In pursuing this strategy, TradeKey is heavily investing in Research and development

(R & D) activities throughout the organization, making strategic alliances and partnerships

with employees and doing joint ventures with globally renowned companies to render most

efficient solutions.

DATA ANALYSIS

Data analysis strategy will be inductive and obtained information through interview will be

arranged into different categories according to the importance. However key themes are also

determined by the literature review which will be further confirmed and analyzed in the

researched company context. Codes will be given to each important theme which is relevant

to the research question. For example recruitment and selection can be represented by R & S.

This will help me identify key variables and their effects on customer service improvement.

This approach will be helpful to devise the model for customer service improvement. I will

use terms like most important or important and less important to give the value to a variable. I

will put the data in to different categories according to themes and unitize the information for

better understanding.

Research Framework

We will give symbols to the independent variables and dependant variable to categorize the

interview and literature review.



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Dependant variable

CA= Competitive Advantage

Independent variables

IT= Information Technology.

HR= Human Resources.

R&D= Research and Development

SA= Strategic Alliance

Table 4: Key implications regarding the ways in which IT, HR, R&D and SA can help in

Service Innovation Thus to render competitive advantage (Literature-based). Source: Own

illustration. (2010).

Independent

Variables Role In Service Innovation

Dependent

Variable

Information

Technology

(IT)

Strategic

alignment

suggests that

the effect of

information

technology

on

performance

will depend

on how well

the

information

technology

strategy and

corporate

strategy

coincide

(Chan et al.

1997; Palmer

& Markus

2000)

Technology

Acceptance is

the most

crucial

element

which can

initiate or

reject the

innovation

Davis (1993)

IT and related

IT-Enabled

services are

helping

companies to

identify and

bring in rapid

changes in

overall

organizational

structure from

production to

customer

support

(Agarwal &

Sambamurthy

2002)

IT adoption

not only

identifies and

brings in

changes in

organization

but also

enhance the

competitive

strengths of an

organization.

(Sambamurthy

et al 2003).

Com

pet

itiv

e A

dvan

tage

Human

Resources

(HR)

Innovation

backed by

quality HR is

an important

means of

survival in

the face of

the dynamic

S.H. Tsaur, &

Y.C. Lin

(2004) have

related HRM

practices like,

recruitment

and selection,

training and

Innovation is

also term as a

successful

exploitation

of ideas” DTI

(2004: p5).

Which can

only be

J.Barney

(1991)

stresses on the

resources of

firm that can

contribute to

achieve the

competitive



Vol.2, No.1, PP. 12-38, March 2014


24

nature of

competitive

environments

(Han, Kim

and

Srivastava,

1998)

development,

compensation

and benefits

and

performance

appraisal to

Innovation

and change

acceptance

generated

from quality

HR

advantage and

also sustain

that advantage

due to their

rarity,

inimitability

and non-

substitutability

Research and

Development

(R&D)

Sources of

innovation

includes

investment in

research and

development

(R & D),

linkages with

customers,

suppliers,

competitors

and

complements

and cluster or

network

innovation

practice are

implemented

at global

levels.

(Melissa A.

Schilling,

2008)

R & D

investment is

accounted for

innovation

and creation

of new

knowledge

and that result

in innovative

products and

services,

when traded

give

economic

growth Paul,

M. Romer

and Charles I.

Jones (2009)

knowledge

sharing and

storing which

is acquired

through

research

(internal or

external),

experience

and customer

feedback,

provided

broad

spectrum of

innovation

Research and

Development

is an

continuous

effort which

requires

proper storage

and re-

utilization of

information to

identify

possible

opportunity

areas

Strategic

Alliance

(SA)

Kleer (2006)

finds that a

merger

increases the

incentives for

innovative

activity of the

merging

parties

Depending on

the strength

of the merged

entity rivals

increase (low

strength) or

decrease

(substantial

strength) their

innovative

activity

There is a

lack of

theoretical

contribution

which deals

directly with

the merger

and

innovation

(Cassiman et

al. 2005).

Merger can

only be

effective if

R&D

activities of

the merged

entity to those

of the

remaining

competitors

should be

measured

accurately as

what would



Vol.2, No.1, PP. 12-38, March 2014


25

have

happened

without the

merger.

Source: Own illustration. (2010).

After categorizing key implications that literature review holds about the role of IT, HR,

R&D and SA in Service innovation and competitive Advantage we now categorize the

interview accordingly to find out the degree of implementation of theory in practice. Table 5

describes the views of interviewees about innovation practices in achieving competitive

advantage in online B2B industry.

Table: 5 Categorization of Interview.

Independent

variable

Ways in which independent variables contributing to

competitive Advantage

Dependen

t Variable

Information

Technology

(IT)

In online

world

business

opportunities

are open to

everyone as it

is easy to

setup and

start business

online the

core

differentiators

is the

availability of

the right

people at

right place

with the right

amount of

technology

and resources

(Q1, Q2)

In Online B2B

IT is the major

contributor to

achieve

competitive

advantage new

product

development

and

augmentation.

IT helps

companies to

indentify new

processes to

improve

internal

efficiency and

external

competitivenes

s by reducing

or controlling

the overall

cost

(Q3, Q6)

In Online

Business

Industry,

Usually an IT

department is

assigned with

new product

development

ideas and

identification

of technology

which offer

ease of use to

internal and

external

customers.

(Q7)

IT systems

not only

provide better

manageability

but also let

companies a

chance to

explore the

world, adopt

and

implement

innovative

ideas.

Technology

improves

Global trade

in several

ways. For

example,

automatic

buyer seller

matching

provide in

time and

accurate trade

meet up and

let supplier

explore more

business

opportunities

in less time. Com

pet

itiv

e A

dvan

tage



Vol.2, No.1, PP. 12-38, March 2014


26

(Q10, Q14)

Human

Resources

(HR)

The most

crucial role is

of the HR

department as

Humans are

the most

important

assets of

service based

organizations,

there HR

department

generally

looking for

ideas through

which

employee can

be kept

motivated.

(Q7)

Human

resource

management

practices are

highly related

to improve

service quality

and introduce

more

innovation in

overall

organization

processes. An

specific to

Services

industry like

online

business, right

people are the

assets of the

company

which not only

perform their

activities well

but also let the

organization to

adopt new

service

augmentation

through their

innovative

minds.(Q1,Q2,

Q17)

HRM

practices like,

recruitment

and selection,

training and

development,

compensation

and benefits

and

performance

appraisal and

implemented

well backed by

a proper

review and

reward system

to make it

tangible,

reliable and

responsive as

everybody will

try to be

innovative to

get more

rewards.

(Q17, Q18)

If a firm has

highly skilled

staff with very

good

attitudes,

capabilities

and

competencies

then these

factors give

you the

relatively

good

advantage

over

competitors.

For example,

human beings

are very

different in

their abilities

and

personalities;

hence their

contribution

to the firm is

specific.

Furthermore,

finding,

acquiring

similarly

competitive

people is also

difficult for

the

competitors,

therefore

human

resource can

provide

competitive

advantage at

least for

specific

period of time



Vol.2, No.1, PP. 12-38, March 2014


27

in Online B2B

industry.

(Q19)

Research and

Development

(R&D)

The research

and

development

department is

more

concerned

with the

target

audience as

what is going

on in the

industry,

what are

customer

preferences,

what our

competitors

doing and so

on so forth.

(Q7)

Research and

Development

act as the

major

custodian of

organizational

knowledge. As

the knowledge

can be wasted

if not properly

organized or

recorded in a

manner to be

get utilized in

future.

Therefore,

Research and

development

acts as bridge

between the

knowledge

hub and its

filtering to

generating

more

innovative

results. (Q20)

Research and

development

in an

important

Source of

innovation

which is

provided best

results if

includes

investment in

research and

development

(R & D),

linkages with

customers,

suppliers,

competitors

and

complements

and cluster or

network

innovation

practice are

implemented

at global

levels. (Q21)

Developed

countries has

a common

practice to

identify and

formulate

future

strategies

through

continuous

data

collection and

R&D. they

collect, store,

utilize and re-

utilize the

knowledge

once collected

through

research and

then make it a

base for

introducing

more

innovation in

their service

offering

(Q22)

Strategic

Alliance

(SA)

Strategic

Alliance is

one of the

most

sensitive

organizationa

l move which

might not

always results

in successful

service

innovation

but most of

the time it

render

Strategic not

always results

in increased

innovation

because there

are various

factors like

motivation,

strategic

dimension of

the

organization

and

commitment

of the

Physical

capital

resource,

equipment,

technology,

location and

access to

resources are

key resources

that enable the

company to

produce

product with

high quality

and at low

Companies

want to spend

their money to

identify new

business

opportunities

and possible

product /

service

augmentation

to help them

keep

competitive.

In online

world this is



Vol.2, No.1, PP. 12-38, March 2014


28

competitive

advantage.

(Q2,Q7)

employees.

Once an

organization

gets dissolved

then there are

very rare

chances that

other

organization

receives the

full benefits of

the observed

company.

However, first

mover

advantage and

good market

reputation may

still contribute

to competitive

advantage.

(Q23)

prices. (Q2) the most

important

element.

Companies

also practice

mergers with

small

companies to

acquire their

intellectual

capital and

inherit their

innovative

ideas. But

generally this

practice

normally does

not get very

much

successful and

it has a lot of

other

dimensions

which are

uncontrollable

factors.

(Q4, Q7)

Source: own illustration (2010)

From the above categorization of interview and literature review we have device following

model in Figure 3 to show the effects of independent variable to the dependant variable.

Figure: 3 A relationships among IT, HR, R&D and Strategic Alliance with service innovation

practice and their impact on Competitive Advantage.

(Source: own illustration (2010)

Organizational Level

Innovation Practices

IT and IT-Enabled Services

Human Resources Standards and Practices

Research and Development Practices

Strategic Alliance with Competitors

Service Innovation

Practices

Process

Innovation

Product

Innovation

Competitive Advantage



Vol.2, No.1, PP. 12-38, March 2014


29

As we have now defined a model for service innovation and competitive advantage lets

analyze the role of independent variable in detail to deduce the most important independent

variable that can contribute to competitive advantage in TradeKey.

We have found that IT and IT Enabled innovation is the most important factor with repeated

at many times in the interview. It can significantly act as the criterion in technology based

service innovation and ensure better manageability and high competitiveness. The second

important factor is Human Resource Management Practices that can keep employees moral

high and also maintain their health to render better ideas and high productivity. In table 3 we

have shown the importance of different independent variable and their frequency.

Table 6: Frequency and Importance of Independent Variables.

Interviewees IT-IT-enb HRM R&D SA

Omer (Research

Manager) Very Important

Very

Important Important

Not Very

Important

Janib (It Manager) Very Important Important

Frequency 6 5 3 2

Frequency Graph: Innovation practices.

The proper Research and Development and knowledge recording with proper sharing

methodology and systems are also very important to indentify innovative ideas and

implementation of services augmentation features to add competitive advantage. In response

to the arguments during the interview it was revealed that TradeKey has a 360o

methodology

for service innovation.



Vol.2, No.1, PP. 12-38, March 2014


30

Figure: 3 A relationships among IT and HR with service innovation practice and their impact

on Competitive Advantage.

Above model implications are various for the service innovation in TradeKey. As in

interviews it is accepted that IT enabled service allow online b2b industry as global trade

innovation. The interviewer has also added that IT systems does not only provide better

manageability but also let companies a chance to explore the world, adopt and implement

innovative ideas and enrich their reach to target audience (Q10). He further added that

TradeKey is itself a company where IT and IT – Enabled services are the core to their global

trade success and rapid organizational growth at all levels (Q11). The interviewer has also

added that in past companies are habitual of searching business directories and paid thousand

of dollar to multiple resources to get them some genuine business leads whereas online B2B

portal like TradeKey has resolved their problem and have provided them access to millions of

buyers on their finger tips (Q11). While putting light on Online B2B industry valued the right

people as the asset of the company which not only perform their activities well but also let

the organization to adopt new service augmentation through their innovative minds. The

interviewer has also revealed the fact that if a person is gone through proper HRM practices

throughout his tenure may thus be “paying back” to their organization by being more

positive, creative and initiator. (Q17)

Service Innovation and Competitive Advantage

The interviewer has agreed to various concepts of service innovation and confirmed variety

of concepts which are already being covered in literature review. During the interview the

research manager has explained the importance of innovation Online B2B term the

innovation and new ideas as the key to your success (Q1). Mr. Janib has also added that in

today’s world Information Technology (IT) is acting as a corner stone for service

improvement and innovation and helping companies in rendering better services to its

customers and attaining competitive advantage. Agarwal & Sambamurthy (2002) finding also

emphasized on the fact that IT and related IT-Enabled services are the best support of

companies to identify and bring in rapid changes in overall organizational structure from

production to customer support and also Sambamurthy (2003) added that the service

innovation is also a source of enhancement of competitive strengths (Q11).

Mr. Omer while passing comments on Fichman (2001) theory he has have confirmed that the

Innovation itself is a process of creative development or more specifically the process of new

idea implementation which is focused towards augmenting features and functionalities of a

Organizational Level

Innovation Practices

IT and IT-Enabled Services

Human Resources Standards and Practices

Service Innovation Practices

Process

Innovation

Product

Innovation

Competitive Advantage



Vol.2, No.1, PP. 12-38, March 2014


31

product or services to render more improved quality services to the customers (Q1). Mr.

Omer further comment on the theory and have specifically commenting on Online business

industry have added that seamless opportunities are available to everyone in Online Business

world but winner can only be that person or company which have creative / innovative minds

and can bring in more competitive service to the market.

While specifically commenting on Resource based innovation as identified by Jay Barney

(1991), the interview has emphasized on availability of resources but has given great

importance to their integration. He commented that there is wide variety of resources which

are if combined properly and in line with the corporate objective of innovation may render

competitive benefits to the company (Q2). Mr. Omer has also categorized the resources in

three broad areas as Jay Barney (1991) does in his research. The core bifurcation of resources

which the interviewer and Jay Barney (1991) have provided is 1) physical capital resources,

2) Human Capital and 3) organizational resources. (Q2). Mr. Omer has also categorized the

physical resources and identifies equipment, technology, location and access to resources as

the key resources that enable the company to produce product with high quality and at low

prices. In human capital resources, the knowledge and intelligence of labor, relationship

among workers and training and development are of significant importance. Which

categorizing the organizational resources he included internal communication system and

infrastructure which reporting systems that fasten the business operations. The interviewer

has clarified that each of the resource in itself contains broad dimension of competitiveness

but he concluded his point on the integration and utilization of these resources as the key.

During the discussion the interviewer has also connected the person thought to the corporate

objective and commented that an idea can only be useful if it is completely in line with the

overall objectives of the organization (Q2, Q3, Q6).

Role of Information Technology in Innovation Practices

While commenting on J.S. Chen and H.T. Tsou (2007) theory, of interconnectivity of

information Technology, innovation and competitive advantage. The interviewer ranked

Information technology as the criterion for service innovation. He linked the IT related

service innovation with Online Business and has claimed that this is all because of IT and

related services which cause the birth of online b2b industry as global trade innovation. The

interviewer has also added that IT systems does not only provide better manageability but

also let companies a chance to explore the world, adopt and implement innovative ideas and

enrich their reach to target audience (Q10). While commenting on Agarwal & Sambamurthy

(2002) theory of overall organization change due to IT and IT-enabled services the

interviewer showed his agreement with the theory and presented the example of online B2B

industry growth from 1990s to till date. He further added that TradeKey is itself a company

where IT and IT – Enabled services are the core to their global trade success and rapid

organizational growth at all levels (Q11). The interviewer has also added that in past

companies are habitual of searching business directories and paid thousand of dollar to

multiple resources to get them some genuine business leads whereas online B2B portal like

TradeKey has resolved their problem and have provided them access to millions of buyers on

their finger tips (Q11). Mr. Janib confidently commented that companies are rarely search

business directories but they prefer to contact with the online b2b service providers.



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32

During the discussion, the interviewer also comment on the competitive advantage which

companies acquire through IT and IT-enabled service innovation as we have discussed in

literature review that the same has also be covered by Sambamurthy (2003). The Interview

commented on the role of Information Technology performs the most significant, as it is the

core ingredient which let companies to improve and innovate their performance measurement

systems and help them in their decision of implementing a new idea launch of something

new in the market which can make them more competitive. (Q12). Mr. Omer and Janib have

given the equal importance to service innovation and integration of resources. Which

specifically discussing the team buy in for IT based organizational change The interviewer

given the high rank to people buy-in or engagement in the success of any IT related

innovation (Q13). He also addressed the literacy issues in under developing countries and

recommended proper trainings and marketing activities a tool to cop up with the change

acceptance issues. He also commented on the same issue in relation to online business and

confirmed that each service augmentation or change requires proper user buy-in else it might

effect in on overall revenues.

While identifying the most important technology which is innovative as well as helpful in

rendering quality services to the customers he ranked CRM (Customer Relationship

Management) system the most highest as CRM helps companies to target their customer with

most appropriateness of their services (Q15). The interviewer rejected the fact the technology

innovation can always be cost effective. He described technology innovation as the expensive

mean to achieve overall cost effectiveness and operational efficiency. (Q16).

Role Human Resources in Innovation

As per the literature review Han, Kim and Srivastava, 1998 defines innovation as an

important means of survival in the face of the dynamic nature of competitive environments.

Cunha and Verhallen (1998) put the theory on the table and combine the HRM with the

organizational change acceptance tolerance and identified technological developments,

deregulation, globalization, shortening of innovation cycles and new buyer needs as the

external resistant to innovations.

Utterback, 1994 discussed the impact of innovation on organizational results in empirical

studies, but relatively little attention has been paid to the extent to which HRM practices may

positively contribute to innovation performance.

During the interview when we have discussed the human resources management and service

innovation (Q5, Q17) and put light on S.H. Tsaur, & Y.C. Lin, (2004) model. The interviewer

related Human resource management practices to improve service quality and introduce more

innovation in overall organization processes. While putting light on Online B2B industry

valued the right people as the asset of the company which not only perform their activities

well but also let the organization to adopt new service augmentation through their innovative

minds.

The interviewer has also revealed the fact that if a person is gone through proper HRM

practices throughout his tenure may thus be “paying back” to their organization by being

more positive, creative and initiator. (Q17) Measurement of employee innovativeness was



Vol.2, No.1, PP. 12-38, March 2014


33

also come in discussion and the interviewer commented that if HRM practices like,

recruitment and selection, training and development, compensation and benefits and

performance appraisal and implemented well backed by a proper reviewable and reward

system to make it tangible, reliable and responsive as everybody will try to be innovative to

get more rewards (Q18).

The interviewer has also relate the human resource capabilities with service innovation and

competitive advantage and has revealed that If a firm have highly skilled staff with very good

attitudes, capabilities and competencies then these factors give the company relatively good

advantage over competitors. As human beings are very different in their abilities and

personalities; hence their contribution to the firm is specific. The interviewer has also

confirmed the fact that finding and acquiring competitive people is the most difficult task for

the competitors, therefore human resource can provide competitive advantage at least for

specific period of time in online B2B industry or in any other service based industry (Q19).

While addressing the issue of poaching, the interviewer agreed that in service industry

poaching is very high (Q19) but TradeKey is the company which provides better pay

packages and keep its employees motivated and provide continuous career development

opportunities to its employees at all levels.

Role of Research and Development

As per our literature review we have discussed the research and development and its sources

which includes investment in research and development (R & D), linkages with customers,

suppliers, competitors and complements and cluster or network innovation practice are

implemented at global levels. These all levels are being identified by Melissa A. Schilling,

(2008). Moreover we have also discussed the span of R & D investment as how it is

accounted for innovation and creation of new knowledge and that result in innovative

products and services, when traded give economic growth Paul, as per the theory of M.

Romer and Charles I. Jones (2009).

We have had also discussed the model of innovation proposed by Kline and further refined

by Rosenberg which is generally accepted to be representative of how innovation really

works if proper Research and development is performed. We have also initiated our questions

related to research and development and service innovation and ask various questions from

our respondents. The interviewer has shown his agreement and confirmed that research and

development is accounted for innovation and creation of new knowledge and that result in

innovative products and services (Q21) which also prove of Kline Model and Romers theory.

He explained how TradeKey is utilizing its research and development department for

identification of new service ideas and improvement identification. (Q21, Q22). He described

the spreaded knowledge and intellect relationship with humans and ranked it as the core

source of information. He also addressed the issue of knowledge leakage and have defined

that TradeKey has put in various system on ground to record and collect knowledge at every

possible event through informal learning session, suggestions, feedbacks, Survey

participation and more. The interviewer has also defines the role of Research and

development and how it acts as bridge between the knowledge owners and its filtering to

generating more innovative results. (Q20, Q21, Q22)



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34

The interviewer has also commented on the investment in research and development and

innovation and how it provide best results and its linkages with customers, suppliers,

competitors and complements and cluster or network innovation practice are implemented at

global levels. He also explained the importance of human resources as the most value of

element of innovation and how TradeKey continuously engage itself in connecting with

internal and external customers through surveys, feedback, comments, informal sessions

(observational techniques) and related methods to extract something useful out of each

human resources and introduce more innovative ideas into the organization. (Q21, Q22)

Strategic Alliance and Merger

Strategic Alliance is the all time tough task and contradicting subject in innovation. As per

our literature review we do not have much theoretical knowledge available on this subject.

This problem has also been addressed by Cassiman (2005) in his research. Only Kleer (2006),

Jost and van der Velden (2006) analyze the impact of mergers on innovative activity. As per

our literature review in past studies are focused on incremental process innovation, whereas

the latest ones deal with a patent race context stressing drastic innovation. Kleer (2006) finds

that a merger increases the incentives for innovative activity of the merging parties. But he

also addressed the dependency on the strength of these merged entity rivals increase (low

strength) or decrease (substantial strength) their innovative activity. He revealed that once,

organizational problems of a merger are accounted for, even the clear picture of increased

incentives for the merging parties disappears. Interestingly Kleer (2006) finds that for most

cases social surplus increases due to merger.

We have put the same question in discussion with our interviewer at TradeKey and he has

confirmed the fact that Mergers or strategic alliance does not always results in increased

innovation because there are various factors like motivation, strategic dimension of the

organization and commitment of the employees (Q23). In service industry he explained that

once organization get dissolved then there are very rare chance that other organization

receive the full benefits of the observed company as most of the top notch employees are

committed with the firm which is if dissolved cause demotivation and does let them unable to

produce quality results.

If we take it away from the theoretical contributions (which however are ambiguous in their

results at the present) the reviewed research also neglects the impact of mergers on the

remaining competitors completely. Such as If R&D belongs to the class of strategic

substitutes, competitors will change their R&D levels downward (upwards) if the merged

entity increases (decreases) R&D post-merger. The point is that comparing the R&D

activities of the merged entity to those of the remaining competitors does not measure

accurately what would have happened without the merger. (Q5, Q23)

CONCLUSION

The core theme behind this research was to identify core ingredients of service innovation

their impact on Online B2B industry in attaining competitive advantage with a resource based

view. We have utilized the interviewing techniques. The Interviews support the positive

effects of IT, HRM, R&D and a negative impact of strategic alliance on service innovation.



Vol.2, No.1, PP. 12-38, March 2014


35

Thus, the difference found in organizational performance in the context of Online Business

can be partially explained by IT, HRM, R&D and strategic alliances practices and policies.

Interviews in this research revealed that IT, HRM, R&D have a significant positive influence

in service innovation, as Fichman (2001) stated. IT and IT-enabled services were found the

most influential service innovation sources that can bring the most competitive and creative

ideas in the organization. Both in the literature and in interviews, researcher has found that

human resources management practices are the most important criterion as in service industry

like online B2B human are core element of innovation. Knowledge sharing, technology

acceptance and right people are most important ingredients of service innovation that ensure

high competitiveness.

TradeKey is continuously investing in human capital to acquire and develop more resourceful

human resources thus to render most cost effective solutions to its members worldwide.

During the interview we have identified that TradeKey was started with only 29 people in

2005 and now TradeKey has achieved over 430 employees in the start of 2010 which clear

investment of TradeKey in human capital acquisition and development. Above all, At

TradeKey all of the departments are directly connected with each other to ensure proper

communication and in time resolutions of members (customers) inquires and concerns.

TradeKey has taken various initiatives to assure service innovation such as lunch of Revenue

911, CS Cell, Informal sessions and many others to facilitate better opportunities to the

available human resources and timely resolution of its members (customers) issues. To

acquire right talent and development of potential resources TradeKey has developed separate

departments from recruiting to Training development, to assure effective acquisition of

resources, TradeKey provides On-Job Practical training to its newly hired resources from day

one and keep them engage in various learning related initiatives. Not only sales but all of the

departments are managed under incentive based target oriented environment which assures

healthy competition and more positive development of human capital.

The Interview has also sketched out TradeKey as the most IT inherited company where the

finest systems and technologies are in place to facilitate competitiveness to the organization.

As TradeKey is an online B2B marketplace therefore, the role of technology is crucial,

TradeKey has recently introduce event based integrated CRM solution which not online

provide tracking on customer events (actions it takes while surfing tradekey.com) but also act

as one stop solution to resolve all customer related inquires. TradeKey is also highly

equipped with advanced technology Business Intelligence (BI) solutions plus a robust

modular ERP system. TradeKey systems automatically conduct customer’s surveys and

present reports to the management to understand customer needs.

Recommendation

Above conclusion leads the researcher to develop the model which is illustrated in figure 3.

This model describes the interrelationship among the HR practices, information technology,

research and development and strategic alliance and their combine indirect affect on service

innovation. HR practices are highly interdependent to each other for example employee

motivation is also related to the training and development of employees. Similarly autonomy

and empowerment approach of management could be effective when suitable and regular



Vol.2, No.1, PP. 12-38, March 2014


36

training provided to the employee in order to take decisions at their own. Furthermore

performance appraisal and monitoring and recording via technology assist the service

delivery by determining the training needs. Therefore coherence among HR practices is

important to maximize their impact on the attitude, behaviors, motivation and satisfaction of

employees to deliver the quality service. According to the model we can also recommend that

HR practices and technology does not have the direct relationship with customer service but

HR and technology result in desire attitudes, skill, competencies, speed and accuracy and

finally employee satisfaction that are all contribute to service innovation which have also

found in the literature and in the interview.

According to the model in figure 2 and 3 we can recommend to the company that it should

design such HR policy and HR systems that particularly focus service innovation. For

instance, training and development programs and use of technology must focus the

satisfaction of customers (internal and external both).

In last we can say that HR, IT, R&D and strategic alliance support our argument that these

are the ingredients of service innovation but not directly. Therefore the improvement in the

service could be seen over the 2 to 3 year period not immediately. That also point out that

managers should design policies with the aim of long-term planning. Company can also

conduct the internal survey of employee satisfaction as it is highly related to customer

satisfaction. Furthermore, company has to establish good working environment by using the

ergonomics guidance to ensure the well-being of employee as it is also related to service

innovation according to our findings.

In last we can say that Proper implementation of HRM practices, experienced adoption of IT

and IT-enabled services, well connected and inform Research and development can all

together render greater service innovation opportunities whereas strategic alliance is the

mediocre variable which requires lots of efforts to impact positively on service innovation.

REFERENCES

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